Dollar firms as Treasury yield climbs, stimulating rebound

The dollar held onto its recent gains on Tuesday following a rise in U.S. Treasury yields, boosting demand for the safe-haven currency.

The dollar has been among the largest losers in the last 10 months as the Fed’s over-dovish policy urged investors to a sell-off. It hit more than 1 ½-year lows against the euro earlier this month. 

Hopes for additional spending under Joe Biden’s administration pushed Treasury yields higher, with the 10-year yield hitting a 10-month peak on Tuesday.

The dollar index last sat at 90.489, unchanged on the day. It bounced off lows of 89.206 hit last week. Against the euro, the dollar stood at $1.2153.

Elsewhere, equity markets were back in a bullish mood. Risk currencies like the Aussie and the kiwi both rose almost 0.3%.